DEFENCE MINISTER JONATHAN COLEMAN: Good afternoon everybody. To the American press corps here welcome to Auckland, New Zealand (inaudible) our New Zealand press people here.

Officially a very warm welcome to the U.S. Secretary of Defense Leon Panetta. It's a very significant visit, the first time in 30 years we've had a U.S. secretary of defense visit here in New Zealand.

And it just underscores the very warm phase of a relationship between our two countries, reflected in the Wellington Declaration and subsequently the Washington Declaration and reflected in the way our people have been cooperating in the (inaudible) internationally for a decade now in Afghanistan, but increasingly also now in our area -- in the South Pacific.

And I would like to say that I (inaudible) welcome the huge U.S. emphasis in our part of the world. It's going to be create opportunities for our military people to increasingly get to know each other over time.

It's very important in terms of developing our own capabilities as we (inaudible) that we are able to exercise with like-minded partners. And I think the future ahead for cooperation is very, very good.

We've had already a -- a very extensive cooperation in planning of exercises around humanitarian assistance and disaster relief. We have a common interest in maritime security, maritime surveillance and of course as Pacific Rim nations we are both very, very interested in what’s happening in this part of the world.

So for us, this part of our engagement with a whole range of partners who have an interest in this part of the world and it certainly (inaudible) builds on the excellent and warm historical ties between the U.S. and New Zealand, as exemplified actually by the visit of the U.S. Marines earlier this year to mark the 70th anniversary of the 1942 deployment here and the subsequent exercising of our troops together in New Zealand and subsequently in the U.S.

I have had an excellent discussion. The secretary is a very easy man to engage with, and it's been great to get his views on the Asia-Pacific region, to talk about the path ahead for cooperation and (inaudible) and also to hear about his recent travels in China, as well as to discuss our key interest in Afghanistan.

And I've taken the opportunity to thank the secretary for the great help we've had from the U.S. in repatriating our dead and wounded from Afghanistan and also would like to take this opportunity to pass on my condolences for the death of Ambassador Stevens and the other diplomatic staff recently in Benghazi.

So, Mr. Secretary, welcome to New Zealand. The floor is yours.

SECRETARY OF DEFENSE LEON E. PANETTA: Thank you very much, Mr. Coleman. Thank you for your kind remarks and for your condolences. I deeply appreciate that.

New Zealand is a very good friend. And it's a -- it's a -- it's a great opportunity for us to -- to continue to strengthen the friendship.

Let me -- let me begin by saying just how delighted I am to be here in Auckland. It's also a -- Auckland has a great flavor of San Francisco, which is very close to my hometown of San Francisco – in Monterey - and -- and having -- someone born in a coastal town in California, close to the Pacific, I think we share, in our blood, a deep feeling for the Pacific.

This is my first visit to this country and, as pointed out, the first visit by a U.S. secretary of defense in 30 years. I've long understood and appreciated the close bonds that exist between the United States and New Zealand.

These are bonds of shared history, bonds of shared values and bonds of shared interests of two Pacific nations. These bonds extend to our two militaries who have fought alongside each other in every major conflict of the last century. And we continue to do so in Afghanistan.

In my meeting with Minister Coleman, I expressed my profound appreciation and I conveyed the appreciation of the American people for New Zealand's contributions to this international effort.

In Bamiyan Province where New Zealand leads the Provincial Reconstruction Team, we have been able to begin transitioning to Afghan security control because of the improvements that New Zealand helped bring about in security and in governance.

I know that this progress has come at a heavy price, heavy price for New Zealand and a heavy price for the New Zealand people. Last month was particularly difficult with the loss of five service members.

And I join Mr. Coleman and the people of New Zealand in mourning for these heroes. And they are heroes who gave their lives for their country and for a cause greater than themselves.

I am very moved by the determination of New Zealand to continue pressing ahead and contributing to the shared effort to build an Afghanistan that can secure and govern itself and that never again becomes a safe haven for al-Qaeda or its extremist affiliates.

This week, let me point out, an ongoing effort in Afghanistan marked a very important milestone. The United States military has completed drawing down the surge forces President Obama committed in December of 2009, reducing our presence by 33,000 troops, and it was done on schedule.

As we can reflect on this moment, it's an opportunity to recognize that the surge did accomplish its objectives of reversing Taliban momentum on the battlefield and dramatically increased the size and capability of the Afghan National Security forces.

That growth has allowed us and our ISAF (International Security Assistance Force) coalition partners to begin the process of transitioning to Afghan security lead, which will soon extend across every province and more than 75 percent of the Afghan population.

At the same time we have struck enormous blows, as many of you know, against al-Qaeda's leadership, consistent with our core goal of disrupting and dismantling and defeating al-Qaeda and, as I said, denying it safe haven.

There's no question that there will continue to be difficult days ahead in this campaign for both of our countries. But the fact is we -- we have had wars before, and we are fighting wars together now.

And I have tremendous respect for the New Zealand defense forces and their capability to be able to work with us to achieve the mission that -- that we -- we are embarked on in Afghanistan.

For the past several years our militaries have begun building a deeper partnership to tackle a wider range of security issues, resulting recently in the Washington Declaration that Minister Coleman and I signed at the Pentagon this June.

Together the minister and I have identified several areas where the possibility exists for closer cooperation between our militaries, particularly as the United States rebalances to -- to place a greater emphasis on its (inaudible) role in the Asia-Pacific region.

These include increasing cooperation in the South Pacific, building New Zealand's amphibious capacity in order to tackle some common challenges and by working multilaterally to build the capacity of other security partners in peacekeeping efforts and humanitarian assistance and disaster relief, all important missions in this area.

As we have sought to build this closer military cooperation. I did work and led an effort to review U.S. policy governing military-to-military cooperation with New Zealand.

The purpose was to find ways to enhance our security cooperation, while still keeping in place the core tenants of longstanding U.S. policy.

To that end today I am pleased to inform -- and did inform Minister Coleman that the United States government is announcing two revisions to the processes that govern our engagement with New Zealand's defense forces.

First, we are removing obstacles to talks between defense officials and the restrictions that were there on exercises. We demanded that there be a waiver and an action took place before these discussions could take place. We've now removed that in order to make it easier so that our militaries can engage in discussions on security issues and cooperative engagements that build on our capacity to tackle these common challenges we've talked about.

Second, we have changed U.S. policy on Royal New Zealand navy ship visits. These restrictions were in place since the suspension of the ANZUS Treaty (Australia, New Zealand, United States Security Treaty). And what this revision will do is allow the United States secretary of defense to authorize individual visits to Department of Defense or Coast Guard facilities in the United States and around the world – that was something that had been prohibited in the past.

These changes I think are important and in the interest of both of our nations. And while we acknowledge that our countries continue to have differences of opinion in some limited areas.

Today we have affirmed that we are embarking on a new course in our relationship. We will not let these differences stand in the way of greater engagement on security issues.

Let me close by again noting that it is a special honor for me to be the first secretary of defense to visit New Zealand in 30 years. The purpose of this trip is really to mark a new era of deepening defense cooperation between the two countries.

As I made clear in my visit to China, the rebalance of the United States towards the Asia-Pacific region is all about engaging with allies and partners and friends and nations, new and old, and ready to advance security and prosperity in this region in the 21st Century.

A stronger defense partnership with New Zealand is absolutely vital to this effort. The United States and New Zealand are close friends, yesterday, today and tomorrow.

Thank you, Minister Coleman, for -- for your partnership and for your friendship in helping to bring about this future.

MIN. COLEMAN: Thank you, Mr. Secretary.

Q: Mr. Secretary, (inaudible).

SEC. PANETTA: Well, we -- we always make a commitment to go after those that attack our forces. And whatever information we have that is credible and that gives us the opportunity to be able to go after those who did it, we will do whatever we have to do in cooperation with the forces of New Zealand to make sure that they -- they understand that nobody attacks our forces and gets away with it.

Q: Mr. Secretary, is it your personal goal to return the U.S.-New Zealand relationship to where it was before 1986 and the treaty was declared non-operable? Would you like to -- would you (inaudible) move into that point?

And, Minister, is New Zealand prepared or do you see the prospect that New Zealand might need (inaudible) restrictions on U.S. ships visiting your ports?

SEC. PANETTA: Look, our goal is to -- is to work with New Zealand to be able to strengthen our relationship and our partnership in this region.

To do what I think is -- is so important, to try to advance the prosperity and security of the Pacific region. This is an important region. And as a Pacific nation, as two Pacific nations, we have a tremendous -- a tremendous dependence on the nations of -- in this part of the world to do what we can to strengthen this region in every way.

New Zealand has been a true -- a true friend. They've -- they've joined with us in battle in every major war in this last century. We have fought together and we have struggled together for the same causes.

And I think it's based on that relationship that I want to do everything possible to make sure that we can fully cooperate in this -- in this friendship.

And yes risk, you know, we are -- we are starting. I think we're embarked on establishing a new era in the relationship between the United States and New Zealand, and I think that will be in the security interest of both of our countries.

MIN. COLEMAN: Well, I agree with Mr. Secretary, we are in a new era and I don't think we should get hung up about trying to turn the clock back to pre-1986 because the reality is the relationship is very, very good.

And I think both sides of the coin, the USA and New Zealand, are enjoying the benefits of that relationship and the state of that relationship without focusing on trying to revert things back to the way they were.

So in terms of restrictions from the New Zealand side (inaudible) about our policy and the (inaudible) and we've moved on from the point where that is (inaudible) between our two governments.

So New Zealand's (inaudible) this time that the policy around (inaudible) remains unchanged and will remain unchanged. But that doesn't inhibit our ability to -- to cooperate and work on these areas of common interest and (inaudible) into a new era with the relationships were extremely good and you know, the wider picture is New Zealand's (inaudible) on a whole range of areas of common interest and (inaudible) continuing.

So now the question (inaudible).

Q: (inaudible).

SEC. PANETTA: I'm -- I'm sorry, if you could speak up a little louder (inaudible) can pick up your question.

Q: (inaudible). The Prime Minister reiterated the other day an invitation for the U.S. Coast Guard (inaudible). And also (inaudible) where we might (inaudible)?

SEC. PANETTA: Yes, I -- I -- I think our goal is to try to work together to develop those kinds of exercises.

One of the -- one of the elements of the strategy -- the defense strategy that we've put in place is aimed at trying to develop a rotational presence by the United States and (inaudible) will (inaudible) greater exercises, greater training, greater assistance with the countries in this region and as I mentioned to the minister, I hope that we will be able to engage in those kinds of exercises in the near future. I think it would be beneficial to us.

After all, New Zealand did -- did participate in the Rim Pac exercise. We've done other exercises together. We're going to continue to try to do that and try to have other partners in the region do that as well.

And with regards to the -- the invitation, I think that's something I’ll leave in the hands of the State Department and (inaudible).

Q: Mr. Coleman how do you justify or explain (inaudible) Afghanistan and (inaudible).

And Secretary Panetta (inaudible) in your opinion (inaudible) large number of (inaudible).

MIN. COLEMAN: Sure. OK.

So in terms of explaining to the New Zealand people our role in Afghanistan (inaudible).

If you look at (inaudible) around the world since 9/11, (inaudible) bombings, London shoe bomber, New Zealand (inaudible). So, we are not immune because of our geographical position from international terrorism.

So our previous governments made the decision which (inaudible) fully support, that we had to be part of an international effort to (inaudible) terrorism in Afghanistan. So that's why we got involved in (inaudible) in the first place.

And then we felt (inaudible) to be part of an international effort to rebuild their country, to rebuild the government and to make a difference (inaudible) education and the basic necessities that we take for granted in (inaudible).

And if you look at what's (inaudible) I know that (inaudible) we've now got (inaudible).

In the pre-2000 era, we've got (inaudible) and mortality. We've got a great improvement in government structures across the province.

So (inaudible) has contributed to driving Al Qaeda out of Afghanistan and also make life a lot better for the people in Afghanistan which makes it much harder for Al Qaeda (inaudible). And ultimately, it makes New Zealand (inaudible).

(Inaudible) so we've been quite clear about our commitments. We (inaudible) take the justice initiative. We have also (inaudible) be providing training for the Afghan (inaudible) and in between the time, we are (inaudible). We will continue to have a presence as part of the international effort (inaudible).

And (inaudible) with the time of (inaudible) in Afghanistan, it's been pretty interesting the public reaction I think, you know, a large part of the (inaudible) has been regardless of peoples political views or how they may originally have felt, people want to see this job done in the right way and to conclusion on the timetable we described. Because otherwise we'd be dishonoring the sacrifice of (inaudible) soldiers who died there.

SEC. PANETTA: The -- the purpose of the -- of the surge was to establish a turning point in Afghanistan. And having those 32,000 troops there indeed, did help us achieved that turning point near the end of 2011. And the goal there was to reduce the level of violence, to ensure that -- that the areas that we were able to take control of and provide security, that we could hold to against any kind of Taliban attack to regain those areas.

And in addition, the purpose was to begin the transition of -- of key areas in Afghanistan to Afghan security and control. And so we began that process as well.

And then lastly it was to build up the capabilities of the Afghan Army so that they, indeed, could take on the responsibility of providing security and they have improved their operational skills to be able to provide that security.

So we have turned that corner and that -- that's the reason we have now gone down those 32,000. And I should remind you that that leaves 68,000 U.S. forces in -- in Afghanistan. If you add ISAF force to that, we're probably still talking about an ISAF force overall and that's close to 100,000 that will still remain there.

And the purpose will be to continue the efforts that we have engaged in to make sure that we continue to reduce the level of violence, to make sure that the Taliban does not regain any of those areas that were involved, that we continue to prepare the Afghan Army so that they can assume full responsibility for the security of the -- of -- of their country.

I think we are on track to accomplish that mission. General Allen feels confident that we can do that. I think I -- I -- I always have tremendous confidence in General Allen's ability to -- to -- to say to me, this is what I need in order to accomplish the mission and right now he is saying that the force he has in pace is sufficient to accomplish that mission.

Q: (inaudible) strengthen ties between China and New Zealand and (inaudible).

SEC. PANETTA: Strengthening the ties between New Zealand and China?

(Inaudible), you know, having just returned from a trip to China, the main purpose of my trip was to try to do whatever we can to try to improve the military-to-military relationship between China and the United States.

I believe the key to our ability to provide for that security and prosperity in the Pacific region is going to be a very important bilateral relationship between the United States and China. And the key to that will be mil-to-mil relationships. But at the same time, I think it's also -- also is going to be a key is the relationship between China and other nations in the Pacific.

And I think to the extent that New Zealand and other countries can establish a strong bilateral relationship with China so that they can have the kind of frank exchanges we had, that they can have the kind of cooperation that we're trying to build. I think that will be an investment in the security and prosperity of the Pacific region.

So I hope that they will engage in that effort.

Q: (inaudible).

SEC. PANETTA: The relationship between China and New Zealand?

Q: (inaudible).

SEC. PANETTA: I guess I should yield to the minister to answer that.

MIN. COLEMAN: Sure, I mean, Mr. Secretary has (inaudible), you know, all nations are engaging with each other over time. So we don't (inaudible) military exercises planned with China but we're much more likely to be involved with them as part of an international exercise which would involve a large number of nations.

So what we have (inaudible) an important relationship with China we’ve obviously got the free trade agreement and we're trying to engage with the military. I mean we had a Chinese office at our (inaudible) college in (inaudible).

But that's (inaudible) relationship with other nations. It's not a (inaudible) choice between one and the other.

And as Mr. Secretary has said, you know the U.S. is trying to build up this military-to-military relationship with the Chinese (inaudible). And New Zealand would like to engage with the Chinese in -- in the same way.

So, you know, I don't think we should feel that New Zealand is about to, you know, engage on some sort of (inaudible) with the Chinese. We just have a very relationship with them and international (inaudible) all nations are trying to build up those military (inaudible). And it's a part of a course that covers diplomacy, (inaudible). It's all about engagement (inaudible) partners who have common interest in the region.

Q: (inaudible). How soon do you think we're likely to see a new New Zealand ship in a U.S. port?

And again, Mr. Secretary, are there any chance the U.S. would cut away from its one fleet policy and allow them the Coast Guard or a non-nuclear ship to come to New Zealand?.

SEC. PANETTA: Since I now have the authority to -- to waive the limits that were put on those ships a decision as to when those ships are in our -- are in our ports or be able to do that rests with New Zealand. But I suspect that soon we'll be able to see one of those ships be able to come into our ports and we would welcome that.

With regard to the long range issues, you know, I think one think one thing I've learned in politics over 40 years is to take one step at a time. I think we've taken some important first steps and let's see where that takes us in the future.

MIN. COLEMAN: Well thank you very much I’m afraid we’re out of time (inaudible).